‘SEBI must comply with the October 2022 order’: Mumbai High Court
The Bombay High Court on Friday admonished the Securities and Exchange Board of India (SEBI) for not enforcing the actions against Times of India Group’s major shareholding firm Bharat Nidhi Limited, facing a series of violations against minority shareholders. Time of India newspapers’ owners Samir Jain and Vineet Jain are controlling Bharat Nidhi Limited. This little-known company Bharat Nidhi Limited is having more than 24% shares in Times of India’s flagship company Bennett and Coleman Company Limited (BCCL).
In a scathing order, the Bombay High Court said the regulator SEBI needs to act in the public interest and must comply with the Court’s order in October 2022. A division bench of Justices G S Kulkarni and Jitendra Jain said such an approach by the SEBI would cause a dent in the confidence reposed in the public body by investors.
The HC had in October directed the SEBI to provide certain probe documents to the minority shareholders of a company. The company and the SEBI challenged this order in the Supreme Court, which dismissed the appeals in November. The petitioners are minority shareholders of Bharat Nidhi Limited and had made various complaints to SEBI accusing the company of violation of securities laws.
The SEBI had then initiated investigations into the same, issued a show cause notice to the company, and later passed a settlement order, which has now been revoked. The petitioners’ case is that neither the investigation report nor any relevant documents were supplied to them. The petitioners alleged that the investigation being done by the SEBI was a farce.
The SEBI on Friday told HC that since the settlement order has been revoked, nothing survives in the present petitions. The bench, however, said there has been “persistent” non-compliance with the order passed by the court and said this was “too far to be imagined and totally unacceptable”. “SEBI is a public body, it is required to act in the public interest, and it needs to comply with the orders passed by this Court,” HC said.
The court said it was constrained to make such remarks as it was quite “astonished” by the stand taken by the SEBI in the present case. Such an approach of the SEBI, in our opinion, would cause a dent in the confidence the investors would repose in the SEBI, which needs to function solely to further the object and purpose, for which it is created by the Parliament,” the bench said. The court added that to its mind, SEBI has resorted to all possible efforts to not comply with its order and “this does not appear to be meaningless”.
“However, it is quite intriguing to note the approach of the SEBI, as clearly seen from the events which had transpired, and from the obstinate stand taken by the SEBI in not furnishing the documents to the petitioners,” HC said. The bench said now that the settlement order has been revoked, the SEBI would adjudicate the show cause notice issued to the company expeditiously. The bench said the petitioners needed to be provided with the documents and directed the SEBI to forthwith comply with its order.
In May 2023, the SEBI slapped Rs.35 crore fine on Sameer Jain and his wife and daughter for Stock Exchange violations. PGurus recently reported the dubious shareholding pattern of the Times of India Group through little-known companies.[1]
BJP leader Subramanian Swamy had filed a detailed complaint against the Jain brothers for a series of tax violations above Rs.28,000 crore to Prime Minister Narendra Modi and different probe agencies.[2]
Reference:
[1] SEBI slaps fine of Rs.36 crore on Times of India owner Samir Jain, wife, daughter and bars them from Stock Exchanges – May 07, 2023, PGurus.com
[2] Subramanian Swamy urges probe by Income Tax, ED, CBI, SEBI and SFIO into the huge tax violations, money laundering in Times of India Group – Dec 25, 2019, PGurus.com
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Too many orders from the higher courts with obvious priorities to matters related to rich, famous, with high connections and represented by a specific class of legal eagles lead to questionable implementation are seriously eroding the impact, fear and respect they deserve. Look within not just to the secure tenure.